New Delhi: The Government on Friday said S&P's negative rating outlook on India's deficit, debt burden and economic health may have "perceptional impact" on foreign investors.
"In their report, S&P raised concerns about issues such as the level of fiscal deficit and debt burden, increase in the current account deficit and the slowdown in the economic growth. However, the revision in outlook may have some perceptional impact.
"Government has taken note of these concerns," Finance Minister Pranab Mukherjee said in a written reply in the Lok Sabha.
He said S&P hasn't downgraded India's credit rating although it has revised the outlook on the long-term ratings of India from stable (BBB+) to (BBB-) negative.
"S&P's assessment should, however, be viewed in the context of the current economic difficulties that nations around the globe are facing and India's comparative performance which has been reflected in the recent rating that it has received," Mukherjee said.
He added that since April several sovereigns were downgraded but India's sovereign ratings have either been affirmed or upgraded in segments.
Mukherjee further said the Government is taking a number of steps to strengthen the economic health of the country.
"These include measures contained in the Budget 2012-13 that are aimed towards fiscal consolidation, improvement in investment environment, development of the infrastructure and industrial sectors, and further development of the human resources," he said.
Mukherjee added, the government is also making efforts to restrict expenditure on central subsidies to under 2 percent of GDP in 2012-13 and to further bring it down to 1.75 percent of GDP in the next three years.
"Government is also making a determined attempt to reduce the budgeted fiscal deficit to 5.1 percent of GDP in BE 2012-13 from 5.9 percent of GDP in RE 2011-12. In addition, efforts are being made towards enactment of Direct Taxes Code (DTC) and drafting of model legislation for Goods & Services Tax (GST)," he said.
First Published: Friday, May 18, 2012, 16:59